Lumentum Holdings Inc. (LITE) stock plummeted 6.12% in pre-market trading on Friday, February 7, 2025, despite reporting better-than-expected Q2 2025 results. The decline was likely driven by concerns over the company's supply chain constraints and weak industrial demand, overshadowing the strong cloud and networking segment performance.

Lumentum exceeded its guidance ranges for both revenue and earnings per share in the second quarter. The company reported robust demand from cloud customers, particularly in data center interconnects and networking markets. However, the Industrial Tech segment revenue decreased 21% year-over-year due to weak industrial end market demand.

Supply chain shortages on some critical components also limited Lumentum's ability to meet demand fully. The company faced yield issues related to new product ramps, impacting gross margins negatively. While Lumentum achieved record EML unit shipments and began delivering 200G Lane speed EMLs to multiple customers, supply constraints hindered their ability to capitalize on the strong demand.

Analysts at B. Riley adjusted their price target on Lumentum to $75 from $62, maintaining a Neutral rating. Northland Capital Markets also maintained a Market Perform rating on the stock. Other research firms may have adjusted their ratings or price targets, potentially contributing to the stock's decline.